TSM - Saying The Unthinkable Out Loud: Nvidia Is History Intel Our Future

2024-06-24 13:16:36 ET

Summary

• Intel is rapidly transforming into a top U.S. foundry company to manufacture high-end semiconductors, with government funding support.
• Intel's new business setup and reinvestment effort could support significant sales/income growth into 2029.
• With one of the lowest valuations in the Big Tech semiconductor sector, any unexpected rebound in earnings could catapult Intel past Nvidia for shareholder returns in coming years.
• Intel appears to be everything Nvidia is not during the summer of 2024.

I am upgrading my outlook for Intel ( INTC ) to Buy , after suggesting a Hold to Avoid rating for a number of years. My May 2022 article here summed up the "value trap" problem plaguing the stock. Following form, the share quote has gone nowhere to down the last 24 months.

Yet, after several years of heavy investment into new plant & equipment, Intel's reimagined focus on becoming a leading foundry fabricator for the whole semiconductor industry in North America has essentially been ignored by Wall Street. Sure, excessive levels of capital spending have slashed earnings and free cash flow generation upfront. But, this business investment spree could pay off in a major way over the next couple of years for shareholders....

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